5 Best Solid-State Battery Stocks to Watch or Buy

Solid-state batteries are an emerging technology that is expected to revolutionize energy generation and storage. These batteries have the potential to redefine how we power our electric vehicles (EVs) and even smartphones by being safer, charging faster, and storing more energy.

These batteries convert chemical energy into electrical energy by using a solid electrolyte, which is a material involving a solid matrix with high ionic conductivity, to move lithium ions from one electrode to the other. This is unlike the currently popular lithium-ion batteries, which use liquid or gel electrolytes.

Having a solid electrolyte allows these batteries to have a long shelf life because solid systems are more stable, can operate efficiently over a wider temperature range, and are non-flammable, making them safer.

But while solid-state batteries offer greater durability, versatility, and a higher energy capacity, they are not widely produced yet. That is because of the challenges they face in terms of cost and scalability, which researchers are actively trying to overcome. Several companies are also investing heavily in the hopes of taking it commercially in the next few years.

Best Investable Companies

So, let’s take a look at some prominent companies, their unique technology, financial performance, and how far their tech is from reaching the market. 

1. QuantumScape (QS +4.7%)  

The California-based QuantumScape Corporation is one of the best ones out there when it comes to the development and commercialization of solid-state lithium-metal battery technology for EVs. Their focus is on making battery production economical and accessible for adoption in various markets, including consumer electronics. 

The company’s battery technology is designed to offer faster charging, greater energy density, and enhanced safety.

Making a battery better than lithium-ion, however, isn’t easy; rather, as QuantumScape’s chief technology officer Tim Holme has pointed out, it’s “really hard.” It actually took them $100 mln and five years just to choose the right material for the solid electrolyte. Another five years and $200 million more later, the company has built prototypes for evaluation. There were over 2 million tests involved, “and there is still a lot more to be done.”

So, it’s clearly a long and arduous journey, and QuantumScape has been progressing well with the backing of the world’s biggest car company, Volkswagen Group, which holds a 17% stake in the company. For its next-gen battery technology, QuantumScape has also partnered with Volkswagen Group’s battery company PowerCo, which combines the former’s cutting-edge tech with the latter’s expertise in global industrialization.

As per this collaboration, PowerCo is to produce about 40 GWh annually using QuantumScape’s technology with the choice to further expand it to 80 GWh, potentially powering one million vehicles per year.

Earlier this year, PowerCo reported on the performance of QuantumScape’s solid-state cell, which passed the endurance test with more than 1,000 charging cycles achieved, surpassing the industry standard of 700. At the same time, they were able to keep it above 95% of the state of health, which, according to QuantumScape’s Principal Product Lead Chris Dekmezian, “is pretty crazy.”

With that, an EV can drive over 500,000 km (over 310,000 miles) without suffering any noticeable range loss. PowerCo CEO Frank Blome called this “a milestone on the way to series production of the solid-state cell” that could ultimately lead to a battery cell that can be charged super-quickly, enables long ranges, and practically does not age. 

While the testing results show solid-state batteries’ capability to offer “exceptional performance,” they are not yet ready for the market and require more work.

Besides PowerCo, QuantumScape also has agreements with two other major global automakers and has established its presence in Japan, featuring a state-of-the-art laboratory for battery research and development to expand its business to Asia-Pacific.

This isn’t all. As one of the leading firms developing solid-state, QuantumScape has also secured the status of a ‘unicorn’ start-up, having a market cap of over $2.813 billion. The company’s shares (QS:NYSE) are currently trading at $5.49, down 21.01% in 2024 due to the market-wide volatility. It has an EPS (TTM) of -0.95 and a P/E (TTM) of -5.75.

The company financials, meanwhile, present a mixed picture. Its Q3 2024 ended with $841 million in liquidity and $130 million in prepayment from PowerCo to bring the QSE-5 technology to mass production. But at the same time, its GAAP net loss was $119.7 million, and its adjusted EBITDA loss came in at $71.6 million, which has been pushed higher for 2024 due to higher legal fees and settlement accruals.

The good thing is the company has begun producing low volumes of its first B-sample cells and is working on the implementation of solid-state technology by EVs at lower volumes in the next couple of years.

2. Solid Power (SLDP +0.45%)  

The next on our list of high-potential solid-state battery stocks is Sold Power, whose shares rallied 47.59% last year. As of writing, the $386.03 million market cap company’s shares are trading at $2.14. Interestingly, much of these gains were secured in the last few days of December, with the SLDP price going as high as $2.69.

This surge in stock price, however, is nowhere near the Dec. 2021 peak of $14.80, which came not long after it got listed on Nasdaq. As for the latest price movement, the company stocks have been seeing some unusually high options volume. This unusual activity has been on the back of SLDP being a subject of various research reports.

A few months ago, Wolfe Research covered Solid Power in its report, where the firm known for its macro research and quantitative analysis issued an “underperform” rating to SLDP and a $1.00 price target for it. Then, a couple of months later, asset management firm Needham & Company also set a “buy” SLDP rating on the stock in a research note while decreasing their target price from $3.00 to $2.00.

Another market dynamic affecting events was the selling of stocks by the company’s senior executives. This has resulted in company insiders now owning 7.20% of the Solid Power stock. Large investors also increased or reduced their stakes in the company stock, resulting in institutional investors now owning 33.66% of SLDP shares.

As for its backers, it was initially funded by the likes of Hyundai, Volta Energy Technologies, Solvay, A123 Systems, Umicore, and Sanoh. Solid Power also has the backing of the second-largest U.S.-based automaker, Ford (F +1.09%), which initially invested in the company in 2019 and then made an additional equity investment to accelerate further development of solid-state vehicle batteries. 

Solid Power further counts SK Innovation and BMW Group among its partners for the testing and production of its initial EV cells, as part of which the German auto manufacturer has been paying Solid Power $20 million.

This year, Solid Power secured a big win as it was awarded a $50 million grant by the US Department of Energy to advance the production of sulfide-based solid electrolyte materials. The company’s all-solid-state cells have the ability to provide a 50-75% increase in energy density.

As for its financials, Solid Power, which has an EPS (TTM) of -0.47 and a P/E (TTM) of -4.51, reported a net loss of $22.4 million for its most recent quarter. This was an increase of 47.93% YoY, which, while it doesn’t really paint a strong picture of the company, was due to the continuous development of cells and electrolytes, which also led to increased costs.

So, while the company’s operating expenses are also rising, it shows that it is actually making progress on its technology. In fact, Solid Power is expecting to complete Phase 1 of its manufacturing project by 2026, with a projected capability to produce 75 metric tons of electrolytes per year, which will increase to 140 metric tons per year in another two years. Meanwhile, the testing of A-2 cells will begin early next year. Also, Solid Power continues to maintain a strong liquidity position of $348.1 million.

3. Toyota Motor Corporation (TM +0.44%)

This Japanese company not only manufactures automobiles and engages in finance but is also heavily involved in solid-state battery research. Toyota Motor Corp. actually started the solid-state revolution more than a decade ago. While Toyota has led this technological advancement, the progress of this giant has been extremely slow. 

Still, Toyota continues to believe in the promise of the technology. This makes sense, given that the company boasts of having more than 1,000 patents related to the solid-state battery. Toyota is actually planning to invest $13.5 billion dollars in batteries, including solid-state batteries, by the end of this decade. 

“As solid-state batteries are smaller and more powerful, they will enable battery EVs to meet a diverse range of needs, from sports cars, which require high-power performance, to commercial vehicles, which require frequent quick recharging.”

– President and CEO Koji Sato said in late 2023

Toyota is aiming to cut down the cost of batteries by 30% or more by improving the cell structure and materials used. For this, it has secured the support of the Japanese government, which gave it certification for the R&D and production of all-solid-state batteries in the country.

The approval has been part of the government’s ‘Supply Assurance Plan for Batteries’ initiative that aims to strengthen batteries’ production infrastructure. Toyota is planning to have a production scale of 9 GWh/ year, and its battery plan will be implemented gradually from 2026 onwards.

To address the challenges concerning solid-state batteries further and make them commercial, Toyota is working with Chinese EV manufacturing giants BYD, Panasonic, and Idemitsu.

All these efforts are finally coming to fruition, with Toyota aiming to begin offering cars with solid-state EV batteries as early as 2027, with mass production to follow soon after, as per its roadmap. The use of these batteries will begin with hybrid vehicles. 

The company’s plans further involve achieving a range of 750 miles on a single charge, with the time of charging also being as fast as just 10 minutes. With this approach, Toyota will address two major concerns of EV buyers, potentially driving greater adoption of these vehicles.

Now, let’s take a look at Toyota’s financials; with a market cap of over $309.045 billion, the company’s shares are currently trading at $195.66, up 6.7% last year. It has an EPS (TTM) of 22.04 and a P/E (TTM) of 8.88 while paying a dividend yield of 2.79%.

For Q3 of 2024, the company reported operating profit of $7.55 billion, which was a decline of 20% from a year earlier. This was the first quarterly profit drop that Toyota had seen in two years due to weaker production and sales. 

The reason for this has been stiff competition from Chinese brands and quality issues at Hino Motors. Meanwhile, the sales took a hit in Japan, Toyota’s most profitable market, due to safety issues in two dozen of its models.

Things, however, are finally taking a positive turn for the leading automaker as the issue of production suspension of its two models in the US got resolved, which is expected to help Toyota’s annual global production rate reach 10 million units. Additionally, Toyota has promised to improve production and reduce incentives come next year.

4. SES AI Corporation (SES +15.22%)  

This one utilizes a hybrid approach to achieve the benefits of a solid-state battery but without fully transitioning to solid-state.

Much like SLDP shares, the stock price of SES has experienced a strong rally in the last month of 2024 as its price went from about $0.30 to $2.50 despite going through a downtrend ever since it went public in 2022, for which it changed its name from Solid Energy to SES AI.

These latest gains came as SES announced that it will launch its new AI-enhanced cell for drones and robotics at the 2025 CES Show. It will be the “first battery in the world to contain materials discovered by SES AI’s Molecular Universe efforts.” SES is also planning to demonstrate its high energy density Li-Metal cells for EV and UAM applications.

While that’s yet to come, the company has already passed the GB38031-2020 global EV industry safety tests for its 100Ah Li-Metal cells, which takes it another step closer to the start of production for EVs. Other big developments included signing cell supply agreements with SoftBank and hosting Battery World 2024. 

More importantly, the company is expecting to finally start earning revenue through the discovery of its AI-accelerated battery material this year. Its cash usage for the financial year 2024, meanwhile, is expected to be in the range of $80M to $95M, according to its most recent reported financial results.

Now, the company’s shares are currently trading at $2.42, bringing its 2024 performance to 32.24%. With that, SES has a market cap of over $872.615 million. Its EPS (TTM) meanwhile is -0.24 and P/E (TTM) -10.15. 

The focus at SES, which originated from MIT, is on the development and production of Li-Metal rechargeable battery technologies. These batteries are integrated with AI-powered safety algorithms and recycling. Generative AI, the hottest trend of 2024, as the core of SES’s value delivery, was announced only recently in order to provide a high-performance battery with improved safety.

For its efforts, SES AI has received the backing of some prominent names, including General Motors (GM -0.05%), Fidelity Canada, Applied Materials (AMAT +2.35%), Temasek Holdings, Honda Motor (HMC +0.07%), SAIC Motor, SK, Hyundai Motor Company, Kia Motors, and Tianqi Lithium.

5. Honda (HMC +0.07%)  

With the global electric vehicle market size expected to grow to $1,891.08 billion by 2032 and the issue of limited driving range being the most cited barrier to the adoption of EVs, leading auto manufacturers are racing to develop advanced battery technology to tackle the issues with Honda Motor being the latest one to join.

Honda is going beyond just investing in companies like SES AI and taking up the task of making advances in solid-state battery tech itself.

Late last year, one of the biggest car companies with a market cap of $50.248 billion announced its plans to develop solid-state batteries as a way to produce twice the driving range by 2030 and then over 2.5 times more by the 2040s. 

Honda is touting solid-state batteries as a key technology to make cheaper, safer, and long-lasting EVs. The tech can help the company achieve its plans to increase the annual EV production to over 2 million units by the end of this decade and solidify its presence in the booming EV sector.

“It’s a game-changer of the EV era,” said Keiji Otsu, president of Honda R&D, as the company unveiled its production line in Tokyo, in which Honda is investing $277 million, about half of which is funded by the Japanese government.

The pilot line will begin operations this month with the goal of reducing battery costs by 25%, weight by 35%, and size by half from current levels in the next half-decade. Even Honda’s strategic partner, Nissan Motor, is developing all-solid-state batteries, and the pilot line will start operation in March. They are expecting to work together on materials procurement.

Now, if we look at the company’s stocks, it is currently trading at $28.64 while having an EPS (TTM) of 4.26 and a P/E (TTM) of 6.70. An investor would particularly find the 4.97% dividend yield attractive, which is certainly above the market average and makes up for its volatile stock prices, which, if bought on a dip, may provide good returns. 

As for Honda Motor’s operating profit, it came in at 742.6 billion yen ($4.72bln) for the first half of the year ended Sept. 2024 while having an operating margin of 6.9%. The operating cash flow remained the same at over $8bln after R&D, signaling a strong financial position.

Conclusion

Today, most major automobile manufacturers are investigating the use of solid-state batteries in their vehicles through research, partnerships, and investments. With the solid-state battery market anticipated to grow at a CAGR of 38.2% over eight years to reach $14.74 billion by 2032, this interest certainly makes sense. However, for these batteries to achieve mass commercialization, the kinks still need to be worked out.

Once the challenges of cost and scalability are addressed through R&D, innovation, collaboration, and government support, the promise of solid-state batteries can be realized, potentially becoming a key component of the next-generation battery strategy in the coming years.